Facts: Private respondents Ernesto Pabion and Lovella Ramiro, claiming to be stockholders of the PNCC filed with SEC a verified petition, therein alleging that since 1982 or for a period of 12 years, there has been no stockholders’ meeting of the PNCC to elect the corporation’s BOD, thus enabling the incumbent directors to hold on to their position beyond their 1-yr term, in violation of PNCC’s By-Laws and the Corporation Code. Private respondents, therefore prayed the SEC to issue an order “ordering the officers of PNCC or, in the alternative, authorizing petitioners, to call and hold a meeting of the stockholders for the purpose of electing new directors. The care was assigned to SEC Hearing Officer Manuel Perea.
The Commission en banc held that PNCC being incorporated under the Corporation Code is therefore, subject to Section 50 of the Corporation Code which requires the holding of regular stockholders’ meeting for the purpose of selecting PNCC’s BOD.
Issues:
1) Can SEC determine the corporate status of PNCC?
2) Does SEC have jurisdiction over GOCC’s? Does it have the authority to compel PNCC to hold a stockholders’ meeting for the purpose of electing members of a BOD?
3) Is PNCC an acquired-asset corporation?
Held:
1) Yes. It is certainly absurd to say that SEC is without jurisdiction to determine if PNCC is a GOCC simply because the latter claims to be one. The President does not “determine” whether a corporation is a GOCC or not. It is the law that does. PNCC’s status as a GOCC can be ruled upon by SEC based on law.
2) Yes. GOCCs may either be (1) with original charter or created by special law; or (2) incorporated under general law, via either the Old Corporation Code or the New Corporation Code. SEC has no jurisdiction over corporations of the first type primarily because they are governed by their charters. But even this is not absolute, since the corporation Code may apply suppletorily, either by operation of law or through express provision in the charter.
On the other hand, over GOCCs established or organized under Corporation Code, the SEC can exercise jurisdiction. These GOCCs are regarded as private corporations despite common misconception. That the government may own the controlling shares in the corporation does not diminish the fact that the latter owes its existence to the Corporation Code. Prescinding from such premises, it necessarily follows that SEC can compel PNCC to hold a stockholders’ meeting for the purpose of electing members of the latter’s BOD as clearly provided for by Section 50 of the Corporation Code.
3) Yes. PNCC is indeed an acquired asset corporation as defined in Section 2 (a) of A.O. 59, to wit: a corporation “under private ownership, the voting or outstanding share of which (i) were conveyed to the government financial institutions in satisfaction of debts”.
Moreover, there is no inconsistency between AO 59 and EO 292 otherwise known as Revised Administrative Code. AO 59 does not purport to have established a new kind of corporation that supersedes EO 292. Neither does the former seek to revise the definition of GOCC given in the latter. What AO 59 in fact does is to distinguish GOCCs in general from those that are sought to be privatized. In fact, the definition given in EO 292 itself stated that the GOCCs “may be further categorized”. This caveat suggests that the definition is broad enough to admit distinctions as to the kinds of GOCCs defined under AC 59.
Hence, PNCC is as a GOCC under EO 292. However, for purposes of AO 59, particularly in the application of Section 16 thereof, PNCC is an acquired asset corporation. In this light, the alleged inconsistency is more apparent than real.
The Commission en banc held that PNCC being incorporated under the Corporation Code is therefore, subject to Section 50 of the Corporation Code which requires the holding of regular stockholders’ meeting for the purpose of selecting PNCC’s BOD.
Issues:
1) Can SEC determine the corporate status of PNCC?
2) Does SEC have jurisdiction over GOCC’s? Does it have the authority to compel PNCC to hold a stockholders’ meeting for the purpose of electing members of a BOD?
3) Is PNCC an acquired-asset corporation?
Held:
1) Yes. It is certainly absurd to say that SEC is without jurisdiction to determine if PNCC is a GOCC simply because the latter claims to be one. The President does not “determine” whether a corporation is a GOCC or not. It is the law that does. PNCC’s status as a GOCC can be ruled upon by SEC based on law.
2) Yes. GOCCs may either be (1) with original charter or created by special law; or (2) incorporated under general law, via either the Old Corporation Code or the New Corporation Code. SEC has no jurisdiction over corporations of the first type primarily because they are governed by their charters. But even this is not absolute, since the corporation Code may apply suppletorily, either by operation of law or through express provision in the charter.
On the other hand, over GOCCs established or organized under Corporation Code, the SEC can exercise jurisdiction. These GOCCs are regarded as private corporations despite common misconception. That the government may own the controlling shares in the corporation does not diminish the fact that the latter owes its existence to the Corporation Code. Prescinding from such premises, it necessarily follows that SEC can compel PNCC to hold a stockholders’ meeting for the purpose of electing members of the latter’s BOD as clearly provided for by Section 50 of the Corporation Code.
3) Yes. PNCC is indeed an acquired asset corporation as defined in Section 2 (a) of A.O. 59, to wit: a corporation “under private ownership, the voting or outstanding share of which (i) were conveyed to the government financial institutions in satisfaction of debts”.
Moreover, there is no inconsistency between AO 59 and EO 292 otherwise known as Revised Administrative Code. AO 59 does not purport to have established a new kind of corporation that supersedes EO 292. Neither does the former seek to revise the definition of GOCC given in the latter. What AO 59 in fact does is to distinguish GOCCs in general from those that are sought to be privatized. In fact, the definition given in EO 292 itself stated that the GOCCs “may be further categorized”. This caveat suggests that the definition is broad enough to admit distinctions as to the kinds of GOCCs defined under AC 59.
Hence, PNCC is as a GOCC under EO 292. However, for purposes of AO 59, particularly in the application of Section 16 thereof, PNCC is an acquired asset corporation. In this light, the alleged inconsistency is more apparent than real.
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